The US-China trade war is entering a worrying new phase: a legal arms race

Lead

The US-China trade war is shifting into a more complex phase, as both powers deploy legal and regulatory tools to gain strategic leverage. China has expanded export controls on rare earths and critical technology, and for the first time invoked its "Blocking Rules" to counter US sanctions. Meanwhile, Washington has imposed sanctions on Chinese entities, leaving global companies navigating conflicting mandates.

Coverage comparison

Reporting from Al Jazeera and the South China Morning Post highlights the intensifying nature of the rivalry. Al Jazeera describes China's stance as "more aggressive," noting Beijing has ordered its companies to ignore US sanctions and expand export controls. The South China Morning Post focuses on the extraterritorial reach of China's rare earth controls, which now allow Beijing to restrict products made in third countries if they contain Chinese-origin rare earth content. Both outlets agree the rivalry extends well beyond tariffs, into finance, supply chains, and access to key industries.

Key claims

China's expanded export controls on rare earths and other minerals now include an extraterritorial element, allowing Beijing to restrict products made in third countries if they contain Chinese-origin rare earth content or controlled inputs. As reported by the South China Morning Post, this gives Beijing the ability to choke parts of European hi-tech and industrial supply chains, even when manufacturing occurs outside China. The same report notes that this could hamper efforts to arm Ukraine in its war against Russia, should a drone contain a trace of a Chinese rare earth.

According to the same source, the October controls were paused after Presidents Xi Jinping and Donald Trump met in Busan, South Korea, later that month, much to Europe's relief, but they have remained a looming threat.

Al Jazeera reports that China is pushing back against US economic pressure by ordering its companies to ignore US sanctions and expanding export controls on rare earths and critical technology. The rivalry, it says, is extending beyond tariffs into finance, supply chains, and access to key industries.

The South China Morning Post also details the intensifying legal arms race: both Washington and Beijing are erecting rival and often conflicting legal and regulatory regimes. Beijing has invoked its "Blocking Rules" – a measure adopted in 2021 – for the first time, to counter "improper" foreign actions, including US sanctions on five Chinese oil refiners. In parallel, American authorities have imposed sanctions on Chinese entities accused of maintaining trade links with Iran, including the same oil refiners.

Perspectives

China: Beijing frames its actions as necessary countermeasures to "improper" foreign actions, invoking the Blocking Rules to protect its companies from US sanctions, and expanding export controls to respond to economic pressure.

United States: Washington continues to impose sanctions on Chinese entities it accuses of maintaining trade links with Iran, aiming to enforce its own legal and regulatory framework.

European Union: EU officials, such as Dominic Porter of the European External Action Service, view the relationship as steadily declining, with European supply chains potentially vulnerable to China's extraterritorial controls.